GlobalFoundries Inc. GFS is expanding its presence in the photonics market through a new partnership with SMART Photonics. GFS is seeing accelerating demand for optical networking technologies, specifically in AI and data center applications. In the second quarter of 2026, the company’s communications infrastructure and data center business recorded 62% year-over-year revenue growth, marking its seventh consecutive quarter of double-digit growth. The momentum is partially driven by strong demand for silicon photonics and silicon germanium (SiGe) technologies used in optical networking.
The SMART Photonics collaboration is particularly relevant here. The partnership is set to offer an open-access manufacturing service combining silicon and indium phosphide photonics. This will help customers develop and produce next-generation optical products that can move data faster and more efficiently.
The move fits well with GFS' growing exposure to the AI data-center market. The company is already seeing strong demand for technologies used in optical networking and is working with four of the five largest optical transceiver players. GFS is actively moving towards 1.6 terabit and 3.2 terabit optical modules. The production of its 200-gigabit-per-lane technology is already underway.
The SMART Photonics partnership strengthens GFS’ positioning across a rapidly developing photonics ecosystem. However, the financial contribution from the new SMART relationship will likely take some time to get reflected in its financial results. However, strong AI and optical networking demand will likely boost prospects in GFS’ photonics portfolio in the long run.
Other Major Players in the Photonics Market
Tower Semiconductor Ltd. TSEM is also benefiting from strong demand for silicon photonics. In the second quarter of 2026, Tower reported record revenue of $460 million, up 24% year over year. Its silicon photonics business recorded a triple-digit increase, reaching a $680 million annualized revenue run rate, compared with $180 million a year earlier.
Coherent Corp. COHR is another major player with exposure to the growing optical-connectivity market. The company reported fiscal fourth-quarter 2026 revenue of $2.05 billion, up 34% year over year, while non-GAAP gross margin increased to 40.2%.
GFS’ Price Performance, Valuation and Estimates
GFS has increased 46.4% over the past year compared with the industry’s growth of 34.6%.
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Going by the price/earnings ratio, the company's shares currently trade at 19.67 forward earnings, higher than the industry average of 13.52.
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GFS’ earnings estimate for 2026 has improved over the past 60 days.
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GlobalFoundries currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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